MANILA, Philippines?A Filipino businessman?s offer to acquire Philippine Amusement and Gaming Corp. (Pagcor) for $10 billion has caught the attention of two groups of investors, the state-run gaming firm said Wednesday.

A Hong Kong-based conglomerate engaged in real estate, hotel and casino business has expressed interest in acquiring the gaming firm, Pagcor spokesperson Jay Santiago said.

Talk about Pagcor?s privatization has also attracted the group of businessman Willy Ocier, vice chair of property and gaming firm Belle Corp., according to Santiago.

?We expect that these discussions about the privatization would draw the attention of other investors,? he said.

President Benigno Aquino III favors the privatization of Pagcor but wants the gaming firm to be in good shape first to make its sale to private business more palatable.

Ramon Ang, San Miguel Corp. vice president, earlier told the Inquirer that he was interested in buying Pagcor and that he could lure Malaysia?s ?big boys,? including Robert Kuok, to raise $10 billion to acquire Pagcor and run gaming establishments in the country.

Through his spokesperson in Manila, however, Kuok?owner of the Shangri-La chain of luxury hotels?denied reports that he was interested in Pagcor.

?I don?t know if (Ang?s) offer will stand due to the denial,? Santiago said.

Right price

In an ?informal? conversation with a supposed representative of the Hong Kong group, Santiago said the prospective investor ?(considers) the $10-billion offer interesting.?

?If the price is right, then there might be some interest. The question is, what is the right price?? Santiago quoted the group?s emissary as saying.

He declined to name the group, but said the prospective investor was into real estate and hotel operations across the Asia-Pacific region and engaged in casino operations in the country.

Ang?s offer too small

Santiago said the $10-billion price tag that Ang had floated for Pagcor was too small, considering the 23 years left in its congressional franchise to run the monopoly gambling business in the country.

?The $10-billion (about P450 billion) proposal is a good start, but I think it?s too low. If the time is right, we could make use of different valuation methods,? he said.

With an annual gross revenue of about P30 billion, Pagcor can easily earn P690 billion when its franchise ends in 2033, a difference of some P240 billion from Ang?s proposal (taking the current dollar-peso exchange rate of P45), Santiago said.

?(Ang) said he could raise Pagcor?s annual revenue to at least P35 billion. If he could do it, then why can?t we do it?? the Pagcor spokesperson said.

Cue from Mr. Aquino

Since Pagcor is directly under the Office of the President, the gaming firm will just ?take the cue? from Mr. Aquino, according to Santiago.

?If the President is serious in privatizing Pagcor, then we will start the process. If he thinks he needs immediate funding and wants to sell Pagcor, then we will take the cue from him,? Santiago said.

?If he thinks it?s not urgent and that there?s projects that he wants us to continue, then we will just work to increase the remittances [to the national government] and revenues of Pagcor,? he added.

Valuation managers

To ensure transparency in the sale of Pagcor, Santiago said professional valuation managers would be hired to ascertain the market value of the state-run gambling corporation.

All government expenses related to Pagcor?s privatization must be minimal and reasonable, said Pagcor chair Cristino Naguiat.

?But as we said, Pagcor?s privatization is not on our priority list right now,? Naguiat said.

Regulatory functions

Mr. Aquino is open to privatizing only the proprietary functions of Pagcor as he is keen on keeping its regulatory functions, Budget Secretary Florencio Abad said Wednesday.

The President has instructed Naguiat to undertake a study to determine the real value of Pagcor before entertaining recommendations that it be privatized, Abad said.

?Ultimately that is the direction that the government is headed insofar as the proprietary or the business function of Pagcor is concerned,? said Abad, who was in Bacolod City to speak at a convention of the Philippine Association of Government Budget Administrators.

Abad said the government should not compete with the private sector in areas where the latter was good at. ?Government will just simply improve on its regulatory functions,? he said.

Concession fees

The budget secretary said revenues could still accrue to the government even if Pagcor was privatized.

?If the decision to privatize is by way of concession, then the concessionaires will have to pay concession fees that will enable government to get annual returns from Pagcor, on top of money earned from the sale of the concession,? Abad said.